Tesla's energy business has proven to be a saving grace amidst a slowdown in electric vehicle sales. In the second quarter, while earnings per share fell short of expectations, Tesla reported record revenue of $25.5 billion. A significant portion of this revenue, around $3 billion, came from the sale of battery storage units and solar panels by its energy business, nearly doubling the previous year's figures.
Despite a challenging start to 2024 marked by declining vehicle sales and price cuts impacting profitability, Tesla's energy generation and regulatory compliance segments have emerged as strong revenue drivers. These areas, where Tesla outshines its competitors, accounted for 15% of the second-quarter revenue, with regulatory compliance alone generating $890 million in revenue.
However, analysts caution that the reliability of these revenue streams may vary, and skepticism remains around Elon Musk's ambitious robotaxi business plans, which are perceived as distant and uncertain at this stage.
Following the second-quarter earnings report, UBS analyst Joseph Spak noted that Tesla's business realities primarily revolve around its automotive sector, which has experienced consecutive quarters of declining sales. UBS currently maintains a sell rating on Tesla's stock with a 12-month price target of $197, reflecting a 10% decrease from the current trading price.
As investors reacted to the financial results, Tesla's stock price dropped by nearly 11%, underscoring the market's response to the company's performance. Despite challenges in its core electric vehicle business, Tesla's energy division has demonstrated resilience and potential for growth in the evolving landscape of sustainable energy solutions.
